Micro Focus CEO Hsu On Completing The HPE Software Merger, The New Company's Strength In DevOps And Hybrid IT, And Opportunities For The Channel

The New Micro Focus

A year in the making, software vendor Micro Focus has completed its $8.8 billion combination with Hewlett Packard Enterprise's software business, creating a new major player in the enterprise software market with a broad range of DevOps, hybrid IT management, security and big data analytics products.

Chris Hsu, who previously managed the HPE enterprise software business, is now CEO of Micro Focus as of Sept. 1, the first day of business for the new company.

On the eve of the company's launch, Hsu spoke with CRN and talked about what has been done so far to integrate the company, what is left to do, the company's expanded product lineup and what it all means for its 2,500 solution provider partners. Here are edited excerpts from the interview.

How is the official Sept. 1 launch of the new Micro Focus being marked? Any formal celebrations? Champaign bottles smashed against buildings?

We announced this spin-merge with Micro Focus almost a year ago, it was September 7 of last year, so it's almost a full year. We're super-excited, and the teams have been preparing and doing everything humanly possible to get these two companies ready to merge.

And tomorrow morning in the U.K. there will be a regulatory filing release and a press release to follow that will announce the completion of the spin-merge. And then, because we're launching this company with [newly issued] American depository shares that will trade on the New York Stock Exchange, we're going to be ringing the bell. We'll be up on the balcony ringing the bell first thing tomorrow morning, and then around the world, we'll have global celebrations at all of our local sites.

Our employees are excited about the completion of the spin-merge and the launch of the new, combined Micro Focus.

As executive vice president and general manager of HPE Software, what have you been doing to prepare for bringing HPE's software assets to the new Micro Focus?

We've been working tirelessly on a couple of big priorities. No. 1 is staying focused on our customers and partners and making sure that we're communicating with them about what's going on, minimizing disruption, and making sure that they know we are continuing to invest in the business, continuing to deliver on the commitments we've made to them.

Behind the scenes, we've been doing a ton of things. First and foremost I had to select my team [from] across the two companies, selecting the best of both management teams, allow[ing] us to create a balanced, integrated leadership team that would be best-in-class in the software industry to help us really drive [our] key goals.

And then there's a ton of logistical stuff, from separating IT systems, to moving our legal entity structure over to a new legal entity structure. And then on Sept. 1, we'll consolidate all those into the Micro Focus holding structure.

And finally, on IT [products], we're creating on the HPE software side of the house a completely new and modern IT architecture from the ground up. Then we will bring the Micro Focus assets on too. And we will have the most modern IT infrastructure and application stack in the entire mature software industry. Which fuels our strategy around further consolidation of the software industry.

What have been the biggest challenges that you have had to overcome in preparing for this day? Any unexpected hurdles?

When you are in the course of trying to run the business and, as I said before, focusing on the customers and keeping that part of the business running, and then doing all the other stuff that I just articulated at the same time, everyone basically has double duty. And so the teams just get really stretched. And I think, as a leader, leading through that pressure cooker with intense stress, has been challenging. But I can tell you, I've got an awesome team all around, and I'm excited about the executives and the leaders that we have in this newly combined company. I think that's really been the No. 1 challenge in the last year.

So describe the new Micro Focus. What kind of company is it and what does it have to offer customers and partners?

So the first thing that I would say is that many people don't realize that Micro Focus [as of Sept. 1] will be the seventh largest pure-play software company in the world. And if you think about the peer group that puts us in, it's [among] huge software companies. And I think it's just super-exciting for employees from all these various, different companies that were consolidated into both Micro Focus and Hewlett Packard Enterprise Software, that now we have the global scale to be the seventh largest pure-play software company in the world. It allows us, with a broad and deep portfolio of software assets, to better serve our customers and partners across their hybrid IT challenges, from mainframes all the way to public cloud and on a global basis.

How will it differentiate itself? Who are the company's biggest competitors?

From the perspective of competition, [it] is very broad and it's changing all the time. The competitive landscape changes. As you know, there are always startups, there are established players. And so I'm going to refrain from naming specific competitors.

But what I can tell you is that our mission as a company is to provide our customers with a best-in-class portfolio of enterprise-grade, scalable software with big data analytics built in.

And the reason that's important is that if you look across [our] portfolio that starts with application development and DevOps, and goes into IT operations management – management of your infrastructure regardless of [whether] its mainframe, traditional [IT], virtual private cloud, and public cloud. So we can help our customers manage the complexity in a hybrid IT environment across that entire deployment-model landscape, whether you have [Microsoft] Azure, [IBM] SoftLayer, Hewlett Packard Enterprise or Dell EMC in your landscape.

How about in the security market?

When we put these two companies together, we expand the security portfolio – not just to have the security operations center with ArcSight, but also the ability to secure data from end to end with Voltage [security], whether you're on-prem or in the cloud. And then we add NetIQ from Micro Focus, which was a Novell asset. NetIQ is identity access management [software]. And we're already looking at things we can do with the combination of those assets that can deliver new value to the marketplace.

So we're super excited about the breadth and depth of the portfolio, the focus on enterprise-grade scalable customers – which means we serve the largest, most complex customers and government agencies in the world. And we will leverage our partner network to reach customers all around the world.

What is the company's product development strategy? Will the company invest in extending its capabilities or developing new products?

The second part of our mission statement hits on that directly, which is we have customer-focused innovation. We build high-quality products that our customers can rely on and our people can be proud of. And what's important about the customer-centered innovation is that every product in our portfolio has an innovation roadmap, whether it's a mature product, or a growth product like Vertica, like SUSE [Linux], like some of our security products. Every one of those has a clear innovation agenda that's directly based on customer feedback.

What you won't see us do is act like a venture capital firm where we're going out and funding all kinds of unproven ideas. That's not our place in the ecosystem of software. But what you are going to see us do is to be clear about our road maps, regardless of whether they are products that are in the mature stage of their life cycle or the growth and ramp-up stage, really transforming the industry. And I would put SUSE [Linux], big data analytics and security on the front-end of that growth perspective.

What is the Micro Focus channel strategy? How much of the company's sales will go through the channel or involve a partner?

We have 2,500 partners in our network, and we have to maintain a focus on partners because we just can't reach that broad a set of customers [by ourselves]. In addition to that, 50 percent of our revenue is influenced and touched by partners.

What I would tell you is that if you look at the heritage of Micro Focus, on both sides of the heritage companies – and you know HP has had a very deep relationship with partners for a long, long time – it's truly a partner-led company in many respects.

Sue Barsamian [HPE software chief sales and marketing officer] led channels for Hewlett Packard Enterprise for a long time. And [she] is now my head of global marketing and sales for the combined company.

So deep in our DNA is a channel-friendly, partner-friendly go-to-market [strategy]. And that won't change.

Does Micro Focus have its own channel program in place?

Before the merger, both companies had channel programs. We will maintain those independently until we have the time to integrate them and make sure that our partners are taken care of, [until] the economics and the reward systems and the qualifications are effective for the combined company. [And when] we can actually look at what the revenue is that's generated by each partner when you combine them.

Do you have a timetable for when those two programs will be integrated?

The team is still working on it. I don't want to commit to anything in particular because it depends on IT systems [integration] and some other things we're working through.

What types of partners will Micro Focus work with? What roles will they play?

We'll have partners from the largest generalist partners to smaller, more specialist partners. As I said, we have 2,500 partners in our network. So there isn't a one-size-fits-all [strategy]. We're such a global company, and we operate all around the world in every region. And in some regions of the world, we're 100 percent partner-led. So, for instance, in Central and South America where we do quite a bit of business, we already have an extensive partner network on day one.

I don't know off the top of my head what U.S. partner [revenue] split is. But more than 50 percent of our business is [in the] U.S. with the combined company, and so my guess is that it's not dissimilar to the overall stats I gave.

What do you see Micro Focus being able to offer solution providers that they can't get elsewhere?

Number one, if you think about the large software vendors that are out there, few software vendors can truly provide an end-to-end view of hybrid IT around a couple of key areas.

DevOps, let me take that one for a second. We'll have the largest application delivery management portfolio in the industry. And we'll have DevOps tools from Cobol, to Visual Cobol, to SOAP [Simple Object Access Protocol], the entire Mercury [Interactive software] with the Hewlett Packard Enterprise portfolio, coupled with Fortify, the world's leading code scanning asset so that you can ensure that every line of code is secure from the first line of code [development] to production. Also, through our IT operations management Hybrid Cloud Management Suite, [we offer] the ability to deploy in real-time the right application with the right infrastructure so that you can optimize the underlying performance of your applications.

So DevOps is all about the speed of writing, innovating and deploying workloads that scale. And we're smack-dab in the middle of that with one of the best tool kits in the industry.

What does Micro Focus bring to the table when it comes to hybrid IT?

As I mentioned earlier, both companies have a deep heritage. On the Micro Focus side, managing mainframe applications and mainframe environments. And on the HPE software side, our IT operations management software helping customers provision, automate, orchestrate and manage complex, multi-vendor, multi-system software, and hardware, whether it be on-prem or in the cloud.

So, again, there are very few software companies in the world that can do that. And what I would add is that with the big data analytics platforms that we have [such as] Vertica and IDOL, we're building big data analytics into every aspect of our software because customers are increasingly demanding the ability to have predictive analytics. And not just predictive analytics, but the capacity to be able to monitor and manage in real time the performance of applications, hardware, security environments, et cetera.

We can drive real-time analytics at scale, not just in any one, siloed environment, but across applications, operations, and security. So if you step back and look at our portfolio, through that lens, I like our competitive position in the market.

What are your long-term goals for Micro Focus as relates to the channel?

Our long-term goal for the channel is to deepen our relationship with our channel partners so that they can help drive our business and we can help drive their business. It's a mutually reinforcing proposition.

And I think that goes all the way back into how we develop our products. We have to be able to develop products that have managed service provider structures and architectures so that not only can our channel partners distribute, sell, [and] create services around our software, but they can host, manage, do single-tier and multi-tenant management with our software. We already have many places in our portfolio where we have architected a managed service provider platform that's focused on our partners that's available today. And we'll continue to do that.

What message would you have for solution providers?

The number one message is, again, Micro Focus is the seventh largest pure-play software company in the world with a broad and deep portfolio to help customers across their hybrid IT challenges, all the way from mainframe to public cloud and mobile. And so I would encourage partners to take a very hard look at the combined company and our offerings.

And if they are a Micro Focus partner, and not a Hewlett Packard Enterprise software customer today – or vice versa – they should be pounding on our door to get [into] a partner program immediately. As I mentioned, we're going to have the two partner programs, initially, so that once we integrate those partner programs they'll be up and ready to do business with us. That's my key point for partners.